Tesla Motors Business Strategy Analysis
Added on 2020-03-04
19 Pages4676 Words205 Views
|
|
|
Table of ContentsIntroduction .................................................................................................. SWOT Analysis .............................................................................................. PESTEL Analysis ............................................................................................ Market Positioning Strategy ................................................................................ Tesla’s Core Competency ................................................................................. Leveraging on Core Competencies ....................................................................... Strategies for Competitive Advantage ...................................................................Conclusion ...................................................................................................
IntroductionTesla Motors was founded as an auto company in 2003 by Martin Eberhard and MarcTarpenning. In 2004, Musk invested from personal finances in the company becoming thecompany’s board chairman in 2004. Tesla’s objective was to commercialize the electric cars(Burns, 2014).The company’s first car was the Roadster with battery electric vehicle with morethan 200 KM per each charge. This was a sports car that did not consume gasoline at all(GreenCar Magazine, 2009). The company manufactured its second car Model S in 2015 whichbest received in the market with worldwide sales of 1500 units in four years (Cobb, 2016).Teslawas named the top American brand by consumer Reports (Bartlett, 2017).This paper willdiscuss the internal and external environment the company operates in using the SWOT andPESTEL models and develop a market positioning strategy based on this analysis. It will alsodiscuss the company’s core competency and how the company can leverage on this and developstrategies for competitive advantage. SWOT AnalysisStrengthsThe company was the first to offer a fully electric car and thus can leverage from the first moveradvantages. Tesla gained popularity when it produced the first mass produced the sports carthatwas electric in 2008, the Roadster, (Abreu, 2010). The company has continued to enjoypopularity since this production of green cars with the brand recognized as the top motor brandin the USA (Bartlett, 2017).With a valuable brand name, the company can leverage on this tocontinue producing other products that appeal to the clientele all over the world. The cars havebeen driven by some of the top celebrities thus giving the company popularity including Arnold
Schwarzenegger (Johnson, 2006). Others includeJay-Z and Will Smith amongst other topcelebrities (Meggison, 2014).The company has strength in the capability to raise and invest capital in its engineering andtechnology research thus being able to produce different models of the car which are animprovement of the first car.In 2004, Musk was the first large investor in Tesla putting in $6.5million capital from personal finances. In 2005, Valor invested $2.0 million after the companywas convinced that Tesla’s management was in line with their desired levels of operationalefficiencies and the CEOAntonio Gracias joined the Tesla board(Tesla Motors, 2007).WeaknessesThe company is still small with low output levels and sales. Therefore, it does not benefit fromeconomies of scale compared to the bigger vehicle manufacturers. The vehicles manufacturedmaytherefore not be competitively priced for the mass market in comparison to the other vehiclemanufacturers. It is therefore important to focus on mass production of moderately pricedvehicles. Due to the massive investments in their research and development, the company hasbeen suffering from debt and shortage of cash flows. The interest payments on the debt eat intothe company’s earnings. Without enough cash flows, the company may not manage to continuewith investments for expansion.The company has been in business for a few years compared to other vehicle manufacturers. Thecredibility of the electrical vehicles has therefore not been confirmed in the motor industry.Thiscompares with a company like GM which was known as the largest vehicle manufacturer from1931 to 2007 (Marr, 2009).Customers would thus be more likely to trust the brands that havebeen in the market for as long as the competitors like GM.
OpportunitiesThe prices of oil and gasoline have been going up globally. This presents an opportunity fordemand for the electric cars.The prices have been on upward trends globally not to mention theneed for greener and renewable energy. This has made governments to promote the manufactureand use of electric cars by offering some incentives. The company should exploit thisopportunity and expand their business, as customers continue to source for cheaper and moresustainable solutions.The oil and gasoline reserves are running out globally as this is not arenewable resource. It is therefore crucial that companies look for alternative renewable sourcesof energy and this is an opportunity for Tesla to expand.The electric cars are also green and thus environmental friendly. This presents the clean energysources for the future including the use of renewable energy sources like solar amongst others.The company thus has a great opportunity for the future as manufacturers will have to becomemore innovative to meet the demand for vehicles that supply for a cleaner environment withoutharmful carbon emissions.ThreatsThe company faces the threat of competition from other bigger car manufacturers who aremoving to hybrid vehicles and also electric cars.These include Toyota Prius and GM Volt. Thereis also competition from Wrightspeed X1 that offers an electric car competing directly withTesla. Launched in 2005 by Wright, this was a high-end electrical sports car that was very fastfor performance enthusiasts(O'dell, 2017).There is also the threat of innovations in alternative energy sources like natural gas and hydrogenpowered vehicles.With the green movement and environmentally conscious consumers, the
End of preview
Want to access all the pages? Upload your documents or become a member.
Related Documents
Critical Evaluation of Elon Musk's Entrepreneurial Performance and Shortcomingslg...
|6
|1076
|147
Strategic Management | Assignment | Answerslg...
|5
|1588
|19
Strategy Report of Tesla Motors - Analysis and Recommendationslg...
|22
|5791
|216
Strategic Management Strategies at Tesla Inc.lg...
|15
|3572
|27
Overview of Strategic Managementlg...
|8
|1819
|18
MK9700 Strategic Marketing in the Digital Eralg...
|11
|3128
|110